Tuesday, January 29, 2008

Tax Rebate Smackdown II: INCENTIVES MATTER

The government's resources are not infinite. If it gives out $150 billion today, it must collect an extra $150 billion in taxes tomorrow (unless the government cuts spending, which nobody seems interested in). That's a law of arithmetic. Where will that future $150 billion come from? From the same people who are being encouraged to spend their rebate checks today. That's why this whole thing is eerily similar to the sub-prime lending crisis that got us into this mess — people are being encouraged to spend beyond their means and forgetting that it's all got to be paid back someday.The only way out is for people to actually earn more so they can afford to pay those future taxes. They can earn more only if they work more. They'll work more only if they have the right incentives. For $150 billion, you can hand out a lot of incentives. But the stimulus package is incentive-free.~Steven Landsburg in today's LA Times

3 Comments:

China, Japan and OPEC, the US is on the road to a hyper inflationary depression probably around 2010, with the dollar devaluation from trying to prop up asset prices. With a 9+ trillion dollar budget deficit and 57 trillion in unfunded liabilities for Medicare and social security. The US is going the route of all empires, printing money.